Microsoft purchased a license for UNIX 7th Edition from AT&T in 1979, and announced on August 25, 1980 that it would make it available for the 16-bit microcomputer market. Xenix was not sold directly to end users; Microsoft licensed it to computer manufacturers who then ported it to their systems. The first ports of Xenix were to the Zilog Z8001 16-bit processor.
Altos shipped a version for their computers early in 1982, Tandy Corporation shipped one for their 68000-based systems in January 1983, and Santa Cruz Operation (SCO) released their port to the Intel 8086 processor in September 1983.
Xenix varied from its 7th Edition origins by incoporating elements from BSD, and soon possessed the most widely installed base of any Unix flavor due to the popularity of the inexpensive x86 processor, even though the port created for Tandy computers proved to be more robust.
When Microsoft entered into an agreement with IBM to develop OS/2, it lost interest in promoting Xenix. Microsoft transferred ownership of Xenix to SCO in an agreement that left Microsoft owning 25% of SCO. However, Microsoft continued to use Xenix internally, submitting a patch to support functionality in UNIX to AT&T in 1987, which trickled down to the code base of both Xenix and SCO UNIX. Microsoft is said to have used Xenix on VAX minicomputers extensively within their company as late as 1992.